NISA is tax-free in Japan. It is not tax-free in the United States.
Japan encourages ordinary people to invest through NISA and iDeCo. For a U.S. citizen or green card holder living in Japan, those same accounts create reporting obligations that the Japanese exemption does nothing to remove.
Why a Japanese fund is treated differently
Most Japanese mutual funds and many Japanese-listed ETFs meet the U.S. definition of a passive foreign investment company, or PFIC. A PFIC is reported separately, fund by fund, on its own form, and the default U.S. treatment of a PFIC is deliberately unattractive.
A NISA account does not change this. The Japanese exemption applies to Japanese tax. The U.S. return looks straight through the wrapper at the funds inside it.
What this means in practice
One form per fund, per year
Each holding is reported separately for every year it is held, not once when it is sold.
Elections matter, and they are made early
The treatment available to you depends on choices made in the first year a fund is held. Later years cannot always fix an earlier default.
The decision belongs before the purchase
It is far cheaper to choose the right account structure than to unwind the wrong one.
Fee
Within an annual engagement: +¥33,000 per fund per year.
If you already hold Japanese funds, the first step is simply to count them. The quote follows from that number.
Before you buy, or before you file
If you are holding NISA or iDeCo and filing U.S. returns, this is worth checking now rather than at the next deadline.
This site provides general information, not tax advice. Fees include Japanese consumption tax. Results depend on individual facts.
Aube — Japanese tax accountant (税理士) and U.S. Certified Public Accountant, Washington State (active). Kurashiki, Okayama, Japan. Opening November 2026 — consultations available now.